Kelz Financial Services just paid a dividend of GH4 yesterday to its investors. If dividends are expected to grow at 7% every year with a market yield of 15%, how much is a share of their common stock selling?

Kofi & Kofi Ltd uses the same amount of cash on each of the 250 days it operates during a year. Its annual demand for cash is estimated to be GH300,000 for the next financial year. Management estimates that the company can earn 14 percent on invested cash per annum and will incur GH200 in fees whenever it trades securities.

What should be the optimal cash balance based on the Baumol Model?